corporate results: Ghandhara Nissan’s earnings fall 28% to Rs198m

Company also announces raising equity through sale of right shares

KARACHI: Ghandara Nissan’s profit declined to Rs198 million for the quarter ended March 31, as compared to Rs275.6 million for the same period last year, a decrease of 28%. The company also announced to raise equity through sale of right shares, which sent the stock to its lower limit on Tuesday.

“The sales revenue has dropped and as I see it, it mainly happened because Ghandhara Nissan stopped selling UD Trucks last year,” said Zeeshan Afzal, an analyst at Insight Securities.

Ghandhara Nissan reported Rs1.38 billion in sales revenue, observing a decline of 31% from Rs2 billion. The nine-month sales also declined by 30% from Rs5.33 billion for the nine-month period last year to Rs3.73 billion.

The company’s share price closed at Rs242.39, a decline of Rs12.75.

“When right shares are announced, the market adjusts itself as the new shares are to be incorporated so it is a natural phenomenon. But financial results showed declining profits and that must also have put pressure on the stock during the day,” said another analyst Hamdan Altaf.

Apart from announcing quarter and nine-month financial results, Ghandhara Nissan has also notified stakeholders that its board of directors has recommended to issue 26.67% right shares by offering 12,000,000 right shares to the existing ordinary shareholders of the company at a price of Rs100 per share, including a premium of Rs90, in proportion of 26.67 right shares for every 100 ordinary shares held.

This is supposed to partially finance the expenditure for the revival of existing assembly facility for the manufacturing of Datsun passenger cars and capacity expansion for other its existing businesses. The share transfer books of the company will be closed from May 9 to May 15 to determine the entitlements of right shares.

Ghandhara Nissan has recently been awarded Category-B “Brownfield Investment Status” by the Ministry of Industries and Production for the revival of its existing assembly facility. The company plans to manufacture Datsun passenger cars.

The company is also aiming at capacity enhancement to cater to the increase in existing operations of the company. The company has estimated an investment of Rs5.6 billion, which is intended to be partially funded through issuance of right shares of Rs1.2 billion, required to meet its expansion plans.

The remaining part of the planned investment will be generated through debt financing of Rs3.6 billion and Rs0.8 billion would be internally generated. 

Published in The Express Tribune, April 25^th, 2018.

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